Pierre Duquesne. (Credit: ESA Business School)
Faced with the current conflicts in Gaza and Ukraine, there seem to be two opposing views: One argues that the international order is crumbling or even collapsing, while the other asserts that international relations have always obeyed “the law of the jungle.” Where do you stand?
Without giving ambiguous answers, I believe the reality has always been somewhere in between. While there was the illusion of a shift toward greater multilateralism in the years following the collapse of the USSR, we did not transition from an amiable situation where all the permanent members of the Security Council worked in absolute harmony, to one where they constantly blocked each other.
Since the Second World War, there have always been ups and downs, and I’m not sure there were fewer vetoes in the United Nations Security Council during the Cold War than there are today.
On the other hand, during global or regional economic crises, the international order tends to function more effectively because countries are compelled to cooperate in response to the situation’s urgency.
For instance, the agreement among Organization for Economic Co-operation and Development (OECD) countries to tax multinationals, with over 140 nations endorsing this system in 2021, exemplifies success. Who could have predicted 15 years ago that a framework for global taxation would emerge?
Therefore, solely scrutinizing the functionality of the Security Council is insufficient. Firstly, we may question whether it has ever operated optimally, considering the veto power of its permanent members. Secondly, the organization of the world extends beyond the purview of the United Nations alone.
You suggest that the 1990s were characterized by an “illusion.” Does this imply that disorder is the inherent state of international relations?
I prefer to frame it as a controlled disorder, punctuated by moments of negotiation in pursuit of agreements. When contemporary discourse mentions the emergence of “transactional diplomacy,” I am taken aback because diplomacy inherently involves compromise and negotiation.
Similarly, regarding the concept of the “global South” frequently discussed today, I hold a different perspective. While the “North” may appear to operate as a cohesive bloc (although this assertion warrants scrutiny), there are opposing groups of countries, yet not necessarily a unified “South.”
Even if these countries have very different interests — and may even be in conflict — don’t they still share a hostility or at least a critical view of the West’s attitude?
That’s true, but I’m saying that it’s nothing new. When I started my career, there were three groups of countries designated by letters: Group A (the West), Group B (Eastern Europe) and Group C ( the Third World). There were constant confrontations between the three blocs, and if there were alliances, it was more likely to be between Groups B and C and Group A.
How do you account for the fact that, within this conflict-ridden international order, economic regulatory bodies remain relatively functional?
I tend to believe that international economic organizations operate more smoothly than their political counterparts. However, one of my greatest concerns stems from what I perceive as a trend following the invasion of Ukraine — a sort of “contamination” of these bodies by political issues, even those outside their traditional scope.
Let me elaborate. The IMF convenes biannual ministerial meetings to issue statements. However, since the invasion of Ukraine, these statements haven’t garnered unanimous ministerial approval. Instead, they are now labeled as “presidential conclusions,” reflecting a perceived collective sentiment due to the inability to reach a consensus on matters concerning Ukraine or Palestine.
This development is noteworthy because while failed negotiations are commonplace in global politics, such occurrences have been relatively rare in global economic regulation. This “contamination” is attributable to all parties — the North, the South and the major powers — all seeking to compel the IMF, the World Bank and the OECD to take stances on contemporary geopolitical issues.
You’ve organized numerous international donation conferences, which you’ve even likened to “country telethons.” Is this an effective model?
I consider it a relatively successful new diplomatic tool because it allows the interests of one or two leading countries to be voiced, followed by broader support from the international community. However, when I refer to a “country telethon,” I’m mindful of a fundamental difference: During a telethon, we don’t ask the recipient to alter their behavior.
Was that the aim of CEDRE?
I opted for this acronym [Economic Conference for Development through Reforms with the Private Sectors] in response to the considerable skepticism expressed early on by donors, particularly from the Gulf States.
It required extensive efforts to educate and clarify that this initiative wouldn’t replicate past exercises. Instead, it would adopt a novel approach, emphasizing the abundant entrepreneurial potential within Lebanon. However, this aspect wasn’t fully grasped by the Lebanese authorities.
The Lebanese political class failed to fulfill the requested efforts, and the promised donations never materialized. Have you encountered similar cases of countries deemed “irreformable?”
Personally, I haven’t encountered such cases. However, I genuinely believe that Lebanon isn’t far from restoring international confidence through relatively modest reforms.
Despite its challenges, it remains an attractive nation with a well-acknowledged entrepreneurial spirit. Consider the example of electricity: Rather than resigning to its inefficiency, people are increasingly turning to solar panels. This illustrates that what’s lacking isn’t initiative but a basic level of organization.
What’s not working?
Ultimately, I believe it comes down to the perception that [Lebanon] has navigated past trials before and will do so again. Resilience, in this context, is a double-edged sword: It does not allow succumbing to pessimism at the first setback, yet it’s coupled with the notion that Lebanon holds a central position in the world and that external assistance will arrive just in time to save the day.
This portion of the interview was translated from L'Orient-Le Jour by Joelle El Khoury.
Doesn’t the way the crisis has unfolded give some credence to this view? The situation looks less serious than most experts and economists had anticipated at the start of the crisis.
No, we can’t say that. The GDP dropped by more than half [the IMF has refrained from making an estimate for last year], inequality increased, the number of people living in poverty is significant, etc.
The things that helped avoid a total explosion, in addition to international aid, are certainly resilience, family solidarity, the role of the expats, which feed the country on a massive scale. And then, there are human resources here, considerable talent and niche businesses that create jobs.
But a modern economy presupposes the presence of functioning banks, and cannot be based on cash alone. This country could be a global financial hub or at least a regional one, and it has the talent. But unless the banking crisis is resolved, it’s absolutely impossible.
The local political class might nevertheless say that “since the predicted apocalypse is not there, there’s no need for reforms and the IMF.”
I’m not sure that the apocalypse was promised to happen. And in a way, Lebanon has already started to adopt the IMF adjustment policy without benefitting from the advantages, namely external financing on the one hand and international credibility on the other.
It has adjusted in other ways, notably with the “haircuts” that the people have had to endure, sometimes without even being aware of it, and this has enabled the economy to restart a little bit. The moment you can no longer buy all the imported products at low prices, you have to start producing.
But this adjustment is hard on the population and, to take the example of health expenditure, an agreement with the IMF will very quickly enable the price of medicines to be reduced, with the lira appreciation.
Why did the reformist camp lose the battle of the narratives?
I think it’s because they are too focused on rewriting the past narrative of “Why did we get here and whose fault is it?” rather than “What are our strengths, our weaknesses, in what areas?”
When it comes to the central bank’s audits, for instance, the most important thing was the accounting audit, rather than the forensic audit. The most important thing was to know what the bank was doing and what it had, not who might have misappropriated what. This issue should have been dealt with at a later stage.
Let’s go back to the situation in Gaza. Emmanuel Macron said that recognizing a Palestinian state – which is something you have been calling for – was no taboo for France and that he may do so soon. What hurdles stand in the way?
Honestly, I don’t know. I think there was a moment to be seized with the three European states (Spain, Ireland and Norway) that announced their decision this week, or even before. I find France’s reluctance all the more difficult to understand because Paris voted a few weeks ago in favor of a resolution that would recognize the state of Palestine.
This portion of the interview was translated from L'Orient-Le Jour by Sahar Ghoussoub.
